Case Study-1 :

Recovery of crop loan by Janata Bank in Mymensingh :
Back ground: Janata Bank disbursed Tk. 3 million in short term crop loans to 150 farmers for boro rice cultivation. The loan was given with a 9 months repayment period.

Problem :

(i) Unseasonal rain during harvest damaged crops, leading to low yields and income.
(ii) Only 55% of famers repaid in time.
(iii) Some farmers claimed loan waivers.

Recovery action taken :

(i) The bank formed a special recovery team.
(ii) Farmers were categorized into fully damaged, partially damaged and unaffected based on field visits.
(iii) The bank rescheduled loans for 40% of the affected farmers and provided grace periods.
(iv) Community were organized to educate farmers about credit discipline.

Outcome :

(i) Within four months Janata Bank recovered Tk. 2.7 million of the total loan amount.
(ii) The bank gained trust from local farmers and built stronger relationship.

Tasks to do :

(i) Identify the major internal and external factor that affects loan recovery.
(ii) Evaluate the effectiveness of bank's recovery's trategy.
(iii) Suggest additional strategy that could help improve recovery.
(iv) Calculate the recovery rate and identify the amount still outstanding.